2012 (9) TMI 477 - AT - Income Tax

Tribunal Decision: Appeal Partially Allowed, Additions Confirmed & Reliefs Granted

The Tribunal partially allowed the appeal, confirming some additions while providing relief on various grounds. The additions for undisclosed gold ... Addition on account of undisclosed gold ornaments - Held that:- Some of the jewellery was belonged to the assessee - The balance jewellery belonged to his wife and daughter and source of acquisition was explained - partly in favour of assessee. Undisclosed Investments in shares & securities to be from - Held that:- The assessee’s wife as well as his daughter had disclosed all the shares and securities in their respective returns which had been filed before the date of search. - Decided in favour of assessee. Addition on expenditure on furniture and renovation was made only statement recorded u/s 132(4). Thus, there is no basis of addition of ₹ 1,15,000/- and CIT(A) was not right in confirming the addition - in favour of assessee. Expenditure on Religious fuctions - Held that:- appellant had not explained the source of expenditure on religious function. - the addition of ₹ 30,000/- on account of religious function - against assessee. Addition on Expenditure on tour to Singapore & Goa - Held that:- The appellant had not filed any evidence regarding Singapore as well as Goa tour for explaining the source of expenditure. Therefore, CIT(A) was right in confirming the addition - against assessee. Addition on Household Expenses - Held that:- CIT(A) was right in holding the addition of ₹ 30,000/- on account of household expenditure - against assessee. Addition on account of stamp paper purchase - Held that:- Persuing the statement u/s 132(4) the assessee had hardly purchased stamps valued ₹ 710/- during the year under consideration and remaining stamps were either purchased by other parties or purchased by the assessee in different years. Thus, the CIT(A) was not justified in holding the addition of ₹ 13,650/- - in favour of the assessee. Addition on account of speculative trading - Held that:- It is evident from the documents seized that some of the dividends slips were in the name of assessee and his family members. - the estimate made by the A.O. appears to higher side further the assessee had disclosed shares and securities in the name of the family members in their return. Therefore the CIT(A) order is confirmed to the tune of ₹ 7,00,000/- instead of ₹ 15,00,000/- - partly in favour of assessee. Addition on account of payment made to Modern Engineering and Moulding Company - Held that:- It is undisputed that this transaction is in the name of Assessee’s daughter who was assessed to tax and had own source of income. The payments were made though drafts which were not pertained to year under consideration. Therefore, CIT(A) was not justified in confirming the addition - in favour of assessee. Estimation of professional income on the basis of general client ledger found at the time of search - Held that:- Except client general index register, nothing incriminating document was found whereas the appellant had admitted that he was not reflected full income in the regular books of account. - the addition made by the A.O. appears to higher side, therefore the addition under this head is confirmed to ₹ 2,00,000/- & remaining addition of ₹ 3,33,500/- is deleted - partly in favour of assessee. Issues Involved:1. Validity of assessment after issuance of notices under sections 139(2) and 148.2. Legitimacy of additions based on search proceedings.3. Addition of Rs. 3,00,000/- for undisclosed gold ornaments and jewellery.4. Addition of Rs. 28,845/- for investments in shares and securities.5. Additions for various undisclosed expenditures (furniture, religious donations, tours, household expenses, renovation).6. Addition of Rs. 13,650/- for stamp papers purchased.7. Addition of Rs. 15,00,000/- for speculative trading in shares/debentures.8. Addition of Rs. 1,50,000/- for payments made to Modern Engineering and Moulding Company.9. Estimation of professional income at Rs. 5,33,500/- based on client ledger.Detailed Analysis:1. Validity of Assessment:The assessee's grounds regarding the assessment becoming time-barred after issuance of notices under sections 139(2) and 148 were not pressed. Therefore, these grounds were dismissed.2. Legitimacy of Additions Based on Search Proceedings:The grounds challenging the additions based on search proceedings were deemed general and dismissed. The specific issues were discussed under respective grounds.3. Addition of Rs. 3,00,000/- for Undisclosed Gold Ornaments and Jewellery:The search and seizure operation revealed jewellery worth Rs. 4,18,616/-. The assessee disclosed an additional income of Rs. 3,00,000/- for undisclosed jewellery. The CIT(A) allowed a marginal relief of Rs. 55,509/- and confirmed the addition of Rs. 3,00,000/-. The assessee argued that the jewellery belonged to family members and was disclosed in returns. Considering the Board Circular No.1916 and the Gujarat High Court decision, the Tribunal partially allowed the appeal, confirming the addition of Rs. 1,54,200/- and deleting Rs. 1,45,800/-.4. Addition of Rs. 28,845/- for Investments in Shares and Securities:The A.O. added Rs. 28,845/- for undisclosed shares and securities. The CIT(A) confirmed the addition. The assessee provided evidence that the shares were disclosed in family members' returns. The Tribunal found the evidence convincing and allowed the appeal, deleting the addition.5. Additions for Various Undisclosed Expenditures:- Furniture (Rs. 1,00,000/-): Addition was deleted due to lack of incriminating material.- Religious Donations (Rs. 30,000/-): Addition was confirmed as the source was not explained.- Tours to Singapore and Goa (Rs. 11,000/- and Rs. 6,000/-): Additions were confirmed as the source was not explained.- Household Expenses (Rs. 30,000/-): Addition was confirmed due to insufficient withdrawals.- Renovation (Rs. 15,000/-): Addition was deleted due to lack of evidence.6. Addition of Rs. 13,650/- for Stamp Papers Purchased:The A.O. added Rs. 13,650/- for stamp papers found during the search. The CIT(A) confirmed the addition. The Tribunal found that only Rs. 710/- worth of stamps were purchased during the year under consideration, and the rest were either purchased by others or in different years. The addition was deleted.7. Addition of Rs. 15,00,000/- for Speculative Trading in Shares/Debentures:The A.O. estimated Rs. 15,00,000/- for speculative trading based on seized papers. The CIT(A) confirmed the addition. The Tribunal found the estimate on the higher side and reduced the addition to Rs. 7,00,000/-, giving relief of Rs. 8,00,000/-.8. Addition of Rs. 1,50,000/- for Payments Made to Modern Engineering and Moulding Company:The A.O. added Rs. 1,50,000/- for payments made by the assessee's daughter. The CIT(A) confirmed the addition. The Tribunal found that the payments were made by the daughter from her own source and not in the year under consideration. The addition was deleted.9. Estimation of Professional Income at Rs. 5,33,500/- Based on Client Ledger:The A.O. estimated professional income at Rs. 9,75,000/- based on the client ledger, reducing it by disclosed receipts, and added Rs. 5,33,500/-. The CIT(A) confirmed the addition. The Tribunal found the estimate on the higher side and reduced the addition to Rs. 2,00,000/-, giving relief of Rs. 3,33,500/-.Conclusion:The Tribunal partly allowed the appeal, providing relief on several grounds while confirming some additions based on the evidence and arguments presented.